Nintendo Cuts Earning Forecasts; Hit By Rising Yen

Nintendo, the world's most profitable company, has announced that while its sales has been rising for the nine months ending December 31st 2008, a strong Japanese Yen forced the gaming from to slash its yearly profit forecast by a third.

Net Sales rose by 16.7 percent to $17.07 billion while profits fell significantly by 17.9 percent to $2.36 billion, forcing Nindendo to issue a profit warning saying that the net income will reach $2.6 billion - that's merely a profit of $80 million per month for the last three months of Nintendo's financial year.

The Japanese firm reports that more than 96 million DS consoles have been sold worldwide until now with on average 5.55 games sold per gaming console. The Nintendo Wii gaming consoles shipped as of today stands at nearly 45 million units with an impressive 7 games sold per console.

But the beginning of 2009 is expected to be more challenging; the company has already announced that it expect to sell only 26.58 million laptops by March 2009, down 1 million on previsions, although it increased its estimate for the portable DS console to 31.5 million, up 1 million.

Nintendo's shares were down by nearly 11 percent although, truth be said, the Japanese company is doing much better than Microsoft (whose Entertainment division is planning layoffs) and Sony (which reported a 95 percent slump in profits).

The Kyoto based manufacturer might have pre-emptively slashed its forecasts, taking a hit now, while its other competitors are also down, rather than at a later stage.

It will not be surprising if Nintendo manages to sell more consoles by March 2009 as people choose to stay indoors and play rather than go out.

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Our Comments

Nintendo employs around 3,800 employees and each one of them (including the Tea Lady) generated $1.6 million profit back in 2007 according to the Financial Times. That's nearly three times what Google managed to do over the same period. Even with the slump in profits, they are still managing a very respectable $680,000 per employee.

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